SUNDAY NEWSPAPER SHARE TIPS: ECSC, Burberry and Dairy Crest

We round up the Sunday newspaper share tips. This week, Midas takes a timely look at cyber security firm ECSC, the Times analyses luxury goods giant Burberry, and the Telegraph assesses future prospects at Dairy Crest.

Hackers are everywhere, as Friday’s horrific cyber attack on the NHS showed only too graphically.

In a bid to increase company vigilance, new laws are scheduled to come in next year, under which firms that are deemed to have been slapdash with their cyber security can be fined up to 4 per cent of annual turnover, if they are hit by a hack attack.

The General Data Protection Regulation, as it is known, is forcing companies to take IT security more seriously than ever – which is great news for ECSC, a fast-growing, Bradford-based business specialising in all things cyber.

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HOW THIS IS MONEY CAN HELP

The shares are 396p and should prove a rewarding long-term bet, as the firm is well managed and works in a rapidly expanding field.

ECSC was founded in 2000 by Ian Mann, a former adviser to GCHQ, the Government’s intelligence gathering organisation.

The group offers a variety of services. It helps clients to protect their businesses from cyber attacks and detect them fast when they occur.

It provides assistance around the clock in the event of an attack and it advises company boards on the procedures they need to adopt to minimise cyber risk.

Sales are expected to rise 33 per cent to £6 million this year, almost doubling to £11.6 million in 2018. A £2 million loss is expected this year, as ECSC invests in its future, but a small profit is pencilled in for 2018, rising steadily thereafter.

Midas verdict: ECSC has had a strong debut on AIM but, with the shares at 396p, there is still plenty of potential for growth. Mann is ambitious, he operates in a booming market and the float has given his business extra impetus. Buy.

When the Burberry chairman Sir John Peace led Standard Chartered’s board, he showed a remarkable level of indulgence to the bank’s then chief executive. We all know how that worked out.

While Peter Sands swanned around Davos delivering high-minded addresses, Standard Chartered wrote a succession of duff loans in Asia and copped a heavy fine in America for its lax money-laundering safeguards. Its shares have tumbled 60% from their 2013 highs.

Burberry investors will be praying that history does not repeat itself. But the omens are not encouraging.

For years, Peace has mollycoddled Christopher Bailey, the luxury goods maker’s creative dynamo, to an extraordinary degree. First, he handed him a £20m “golden handcuffs” pay deal. Then, in 2014, Peace installed Bailey in the chief executive’s office — left vacant by Angela Ahrendts — while allowing him to keep his creative brief.

This unusual move didn’t work out, so Peace hired a new chief executive. Former Céline head Marco Gobbetti takes charge in July.

So has Peace finally shown Bailey who’s boss? Hardly. In an apparent attempt to avoid denting his ego, Bailey has been anointed president and, crucially, will report directly to his chairman, not his nominal boss, Gobbetti.

Burberry’s revival rests on a bounce in luxury goods spending and Gobbetti’s ability to navigate its complex boardroom politics. Both are questionable. Avoid.

THE TELEGRAPH

There is an unmistakable trend for food companies that don’t simply want to feed consumers anymore. Beyond KitKat and Nespresso, Nestle is investing in treatments for gastrointestinal conditions and acne and Unilever has spent billions on shampoo brands but is offloading Flora and other low-growth margarines.

The shift could have something to do with unpredictable consumer tastes. It might be linked to grocery price wars, higher input costs and the spiralling marketing budgets required to build brands that leap from the shelves. Certainly a lot of it has to do with the search for higher margins and advances in food science.

Take Dairy Crest, the cheese and butter maker best known for its Cathedral City and Country Life brands. Its investment case and attractive dividend have plenty to do with the UK’s love affair with cheddar. But the game changer for the shares is whether it can commercialise a product to create fatter chickens.

You can’t fatten chickens overnight. Last November, the company reported interest from a number of commercial partners after its academic trials showed up a potentially positive impact from putting galacto-oligosaccharide (GOS) into animal feed. GOS is a lactose-based substance derived from whey, a by-product of the cheese-making process.

In the meantime, GOS is already been sold for use in infant formula, along with demineralised whey, from its £40m facility built in Davidstow, Cornwall. Dairy trader Fonterra is helping to build a customer base.

The problem has been the quality of the whey since production began in May 2016. In March, chief executive Mark Allen reiterated the company would hit its target in the financial year just ending, that at least 80pc of the demineralised whey it produces would meet the grade required for infant formula.

One of Dairy Crest’s corporate brokers, Peel Hunt, expects forecasts to be underpinned, with infant formula being helped by rising prices. It has pencilled in annual sales flattish at £423.5m and adjusted pre-tax profits rising 7pc to £61.5m.

The company’s developing export business should benefit from the strong pound and there is more cost to be trimmed, such as from the installation of a new IT system.

The shares trade at less than 15 times this year’s forecast earnings. Hold.